December 2, 2023

Job growth slowed more than expected in October and the unemployment rate climbed to 3.9%, marking the end of large monthly gains, the government reported on Friday.

Nonfarm payrolls grew by 150,000 last month versus a downwardly revised 297,000 in September. The unemployment rate rose to 3.9% from 3.8% the month prior, according to the Labor Department.

The job gains is less than the 170,000 figure expected by economists and well below the 260,000 monthly average so far this year.

“The nation’s economy is still resilient despite rapid and appreciable tightening of financial conditions,” Selma Hepp, chief economist at CoreLogic, said in an emailed statement. “Going forward, moderation of job gains is expected though the imbalance between labor supply and demand suggests wage growth will take more time to loosen up.”

Health care, government and social assistance fueled the rise in payrolls while other categories displayed lackluster growth or declines.

Manufacturing jobs dropped by 35,000 in October, a fall mostly attributable to the now-ended United Auto Workers strike.

The report comes after the Federal Reserve opted to leave its benchmark interest rate unchanged for a second consecutive meeting as the central bank strives to curtail high interest rates.

“We expect the labor market to soften and economic activity to slow over time in response to a restrictive policy stance. In terms of Fed policy, our base case remains that rates are at a peak and policy will remain restrictive for some time until inflation moves convincingly towards target,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, stated. 

Average hourly earnings climbed 0.2% in October, up 4.1% from a year ago, while earnings for nonsupervisory workers rose 0.3% for a second straight month.

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